LOSS CHARGED TO JOB: LOSS CHARGED TO ALL PRODUCTIO
1) When work is started SAME As that of Job W-I-P A/C Material A/C Payroll A/C FOH applied A/C
(Being cost of work started)
2) When units become defected and rework is done: FOH A/C W-I-P A/C Material A/C Material A/C Payroll A/C Payroll A/C FOH applied A/C (Being cost of rework) FOH applied A/C (Being cost of rework)
3) For completion of goods: SAME
Finished goods A/C W-I-P A/C (Being cost of work completed)
Summary of Entries For Spoiled Goods
LOSS CHARGED TO JOB: LOSS CHARGED TO ALL PRODUCTIO 1) When work is started SAME As that of Job W-I-P A/C Material A/C Payroll A/C FOH applied A/C
(Being cost of work started)
2) When units become spoiled: Spoiled work A/C (sale price) Spoiled work A/C (sale price) FOH A/C (actual loss) W-I-P A/C (Being cost of spoiled work) W-I-P A/C (total loss) (Being cost of spoiled work)
3) For completion of goods: SAME
Finished goods A/C W-I-P A/C (Being cost of work completed)
4) For sale of spoiled work: SAME
Cash A/C Spoiled work A/C (Being sale of spoiled work)
Practice Question No 13,14,15 page 189-190
Practice Problems 7-7 and 7-8 page 193,194
E-13
LOSS CHARGED TO JOB: LOSS CHARGED TO ALL PRODUCTIO
W-I-P A/C 60000 W-I-P A/C 60900 Material A/C 24000 Material A/C 24000 Payroll A/C 18000 Payroll A/C 18000 Applied FOH A/C 18000 Applied FOH A/C 18900 (Being cost of work put into process) (Being cost of work put into process)
1) When units become spoiled: (500×5) Spoiled work A/C 2500
Spoiled work A/C 2500 FOH control A/C 2575 W-I-P A/C 2500 (Being cost of spoiled work) (500×10.15) W-I-P A/C* 5075 (Being cost of spoiled work)
2) For completion of goods: Finished goods A/C 55825
Finished goods A/C 57500 W-I-P A/C 55825 W-I-P A/C 57500 (Being cost of work completed) (Being cost of work completed)
3) For sale of spoiled work: SAME
Cash A/C 2500 Cash A/C 2500 Spoiled work A/C 2500 (Being sale of spoiled work) Spoiled work A/C 2500 (Being sale of spoiled work)
WIP A/c *Total cost of loss = 60900 / 6000 × 500
= $ 5075 Per Unit Cost in Case 2: 55825/5500=10.15(always remains same when charged to Production) Per Unit Cost in Case 1: 57500/5500= 10.45 (always increases when cost is charged to job) Problem 7-8
LOSS CHARGED TO JOB: LOSS CHARGED TO ALL PRODUCTIO
W-I-P A/C 8375 W-I-P A/C 8550 (1000×4) Material A/C 4000 (1000×4) Material A/C 4000 (1000×1.75) Payroll A/C 1750 (1000×1.75) Payroll A/C 1750 (1750×150%)FOH applied A/C 2625 (1750×160%)FOH applied A/C 2800 (Being cost of work put into process) (Being cost of work put into process)
W-I-P A/C 71.25 FOH 73.5
(75×0.20 ) Material A/C 15 (75×0.2 Material A/C 15 (75×0.30) Payroll A/C 22.5 (75×0.30) Payroll A/C 22.5 (22.5×150%)FOH applied A/C 33.75 (22.5×160%)FOH applied A/C 36 (Being cost of work put into process) Being cost of work put into process)
W-I-P A/C 8446.25 W-I-P A/C 8550 (Being cost of work completed) (Being cost of work completed)
Per Unit Cost= 8550/1000=8.55
Per Unit Cost= 8446.25/1000=8.44 LOWER OF COST OR MARKET Items Original Replacement Floor Ceiling Market Lower of cost cost market or cost $ $ $ $ $ $ Given Given Given Self Self Self Self calculation calculation Floor = Sale price - cost of completion and sale - Normal profit Ceiling= Sale price -cost of completion and sale Market= Replacement price within the range of Floor and ceiling (select the middle value)